Today’s Market Update

Yield Curve Continues to Steepen with Optimistic Outlook for 2021
2021-02-22

This morning equity markets ticked lower and Treasury yields continued to edge higher with the 10-year Treasury yield above 1.3%.  Last week had mixed economic data, with the labor market continuing to grow below expectations but several other metrics showing surprisingly positive results.  The positive surprise in the data and the consistent message from the Fed on their accommodative policy stance is boosting optimism about the pace of the current recovery.  The Treasury curve has continued to steepen as the positive data has come in and we will look to Fed Chair Powell’s next comments on whether the Fed is concerned about the current pace of the rise in longer-term rates.  To achieve the best outcome for 2021 economic growth it is critical that the new administration continue effectively distributing the COVID-19 vaccine and quickly pass new fiscal stimulus.  This remains particularly important as the US continues efforts to stop the spread of COVID-19, although over the past month there has been a significant fall in the daily number of new cases and hospitalizations.  To date, the US has recorded over 28.1 million coronavirus cases and more than 499,000 deaths according to data from John Hopkins.

-CMS Staff

Treasury Yields

Term  Current  Last Month
3 Month0.03%0.08%
6 Month0.04%0.09%
2 Year0.11%0.12%
5 Year0.59%0.44%
10 Year1.34%1.09%
30 Year2.13%1.83%
Yields updated each morning.
Source: Bloomberg

Benchmarks

PRIME3.25%
DJIA31,387.45
Crude Oil (WTI)$61.11
YEN105.0900
Gold$1,807.43
1 Year CMT0.06%
1 Month LIBOR0.1155%
Fed Funds Effective0.07%
Next FOMC MeetingMarch 16-17th, 2021
Source: Bloomberg

Economic Indicator Calendar

DateEventPeriodSurv (M)ActualPriorRevised
02/22Chicago Fed National ActivityJan0.660.520.41
US Leading Index MoMJan0.5%0.5%0.3%0.4%
Dallas Fed Mfg Business IndexFeb7.0
02/23House Price Index YoYDec11.0%
House Price Index MoMDec1.0%
House Price IndexDec310.1
S&P/CS HPI Composite 20 S.A. MoMDec1.3%1.4%
S&P/CS HPI Composite 20 N.S.A. MoMDec1.1%
S&P/CS HPI Composite 20 N.S.A. YoYDec9.9%9.1%
CB Consumer Confidence Feb90.089.3
Richmond Manufacturing IndexFeb1614
02/24MBA Mortgage ApplicationsFeb 17-5.1%
New Home SalesJan2.1%1.6%
New Home Sales MoMJan855k842k
02/25Initial Jobless ClaimsFeb 18838k861k
Continuing ClaimsFeb 114,467k4,494k
Core Durable Goods Orders MoMJan0.7%1.1%
Durable Goods Orders MoMJan1.1%0.5%
Durables Ex Defense MoMJan0.8%
Goods Orders Nondef Ex Air MoMJan0.7%0.7%
Core PCE Prices Q41.40%1.40%
PCE PricesQ41.5%
GDP QoQQ44.2%4.0%
GDP SalesQ43.0%
GDP Price IndexQ42.0%1.9%
Real Consumer SpendingQ42.5%
Pending Home Sales MoMJan-0.2%-0.3%
Pending Home Sales IndexJan125.5
KC Fed Manuf IndexFeb22
02/26Advance Goods Trade BalanceFeb-$83.19b
Personal Income MoMJan9.5%0.6%
Personal Spending MoMJan2.5%-0.2%
Real Personal Consumption MoMJan-0.4%-0.6%
PCE Price Index YoYJan1.3
PCE Price Index MoMJan0.4%
Core PCE Price Index YoYJan1.4%1.5%
Core PCE Price Index MoMJan0.2%0.3%
Retail Inventories ex AutoJan1.2%
Wholesale Inventories MoMJan0.3%
Chicago PMIFeb61.163.8
U. of Mich. SentimentFeb76.576.2
U. of Mich. Current ConditionsFeb86.2
U. of Mich. ExpectationsFeb69.8
U. of Mich. 1 Yr InflationFeb3.30%
U. of Mich. 5-10 Yr InflationFeb2.70%
Source: Bloomberg